A leading carbon target arbiter has come into fire after ruling to allow carbon offsets — what's the big deal?

The Science Based Targets initiative (SBTi), revered for its role in setting rigorous climate targets for corporations, has now found itself at the centre of a storm, with dozens of its own staff demanding the resignation of the organisation’s board members.

For those not in the know-how, the SBTi is a climate body that has aided over 5,000 companies set ‘science-based targets’ to help themselves achieve carbon neutrality and join the fight against climate change. Backed by a coalition of many important non-profit groups, including key institutions such as the World Resources Institute and the World Wide Fund for Nature (WWF), the organisation also helps verify if companies have actually made discernible progress in their respective green transitions.

Despite being in such a noble field, SBTi made headlines recently when it declared that companies could utilise carbon offsets on a large scale to fulfill their climate commitments. Many experts, and even SBTi members, fear that this move could provide a loophole for major polluters to sidestep genuine emissions reductions.

What even is a carbon offset?

A carbon offset refers to a way by which organisations or individuals can cut down on their carbon dioxide emissions from the atmosphere. These reductions are typically achieved through projects that either capture and store carbon or prevent emissions from occurring in the first place, such as through renewable energy projects, reforestation initiatives, and methane capture from landfills.

Companies or individuals purchase carbon offsets to compensate for their own carbon emissions, thereby “offsetting” their environmental impact and contributing to climate change mitigation efforts. Think of it as planting an equal tree for every tree you cut, so that your impact on the environment remains negligible.

Isn't offsetting carbon a good thing, then?

Well, no. The problem is that emitters have now taken to purchasing carbon offsets instead of slashing their own emissions, which could fundamentally undermine the very essence of climate action. The credits are often tied to projects like tree-planting, which, as studies are now beginning to show, aren’t really that effective at permanently removing carbon from the atmosphere. The new SBTi offsets ruling could hence greenlight major polluters to use their mountains of gold to just buy more carbon credits instead of turning their processes green, and inadvertently greenwash the public in the process.

Further, the involvement of the Bezos Earth Fund, a major financial supporter of SBTi, has added fuel to the fire. The fund's staunch advocacy for scaling up voluntary carbon markets, coupled with its influence in discussions surrounding the use of offsets, has raised eyebrows and questions about potential conflicts of interest. And yes, if the name sounds familiar, the fund has been set up by Jeff Bezos himself — the founder of Amazon, a company that has become notorious for emitting more carbon than even some countries, such as Norway, Ireland and Denmark.

Despite the backlash, industry groups like the We Mean Business Coalition have welcomed SBTi's decision, arguing that it could facilitate the validation of more corporate net zero targets. Banks, oil giants, and chemical companies are poised to submit their long-term emission reduction goals for approval, with carbon offsets likely playing a significant role.

However, dissenting voices within and outside SBTi continue to warn of the dangers posed by legitimising carbon offsets. Financial Times reported that Stephan Singer, a senior SBTi's advisor, resigned from the institution following their controversial decision. Singer, along with other critics, sees carbon credits as a dubious solution that could ultimately bolster the fossil fuel industry rather than combat climate change effectively.

As the debate rages on, the future trajectory of corporate climate action hangs in the balance. Will the adoption of carbon offsets mark a pragmatic step forward or a reckless retreat from genuine emissions reductions? The stakes are high, and the verdict on SBTi's controversial decision remains to be seen.